Businessweek Archives

Israel

July 12, 1992

International Outlook: Global Wrapup

ISRAEL

For beleaguered McDonnell Douglas Corp., the stunning victory of Israel's Labor Party in general elections is good news. Fearing political fallout in an election year, the Bush Administration had sidelined the company's bid to sell F-15 fighters to Saudi Arabia. But Labor's gain could pave the way for a thinly veiled quid pro quo that would give the F-15 deal a green light.

Yitzhak Rabin, the new Israeli Prime Minister, has pledged to freeze construction of Jewish settlements in the West Bank. In return, the White House is likely to reward Israel by approving some of the $10 billion in U.S. loan guarantees it wants to help house former Soviet Jews. That, Capitol Hill and defense-industry sources say, could defuse congressional and voter opposition to the F-15 sale. For McDonnell, the stakes are big. Already, 1,000 workers have been laid off, and without a Saudi order, the F-15 line will go cold in 1994.